Tuesday 6 October 2009 04.45 EDT
First published on Tuesday 6 October 2009 04.45 EDT

David Cameron today said that he would take action to stop women's retirement age rising too quickly as he clarified Tory proposals to make people work until the age of 66 in a bid to cut Britain's budget deficit.

The Conservative leader said he hoped to get all-party support for the plan, which would save an estimated £13bn and which would affect all men and women under the age of 58.

Last night, the Tories unveiled their proposal – which would involve implementing existing government plans to raise the pension age from 2016, instead of 2026 as planned. George Osborne, the shadow chancellor, will give further details when he addresses the Conservative conference later this morning.

But analysts immediately spotted a problem. The government is raising the pension age for women, to bring it up to the pension age for men, but this process will not be complete until 2020. Initially, it seemed that the Tory plan could result in the pension age for women rising from 63 to 66 in a single year.

This morning, in an interview on Radio 4's Today programme, Cameron said that although the party wanted to raise the pension age 10 years early, it would conduct a review first before taking final decision.

Cameron said that Lord Turner, who conducted the review that led to the government's original plans to increase the pension age, now accepted that his recommendations should have been "more ambitious". Turner "recognises that life expectancy has gone up", Cameron said.

Cameron said he wanted the review to examine "how best to provide a proper glide path to synchronising the two pension ages". When asked about the pension age for women rising from 63 to 66 in one year, Cameron said: "A jump like that is out of the question, clearly."

The Tory leader said he hoped that "all parties will come behind us and say that this is an important thing to do". He stressed that 2016 was the earliest date at which he would like to raise the pension age to 66, suggesting that the review could led to the proposal being watered down.

In his speech today, Osborne will say the increase in the pension age must be implemented sooner if the government is to meet a pledge for the next parliament to restore the basic state pension link with earnings, as opposed to prices.

"This is another one of those trade-offs any honest government has to confront," Osborne will tell the conference. "All parties accept that to afford that, with an ageing population, the state pension will have to rise."

Labour launched its own dramatic spending counter-strike last night by announcing it was recommending either a pay freeze, or just 1% increases, next year for 750,000 public sector workers, including doctors, prison officers, dentists and civil servants. About 40,000 of the most senior civil servants, judges, GPs, quango heads and NHS managers will be told they should get no pay rise at all.

The Treasury recommendation to the independent pay review bodies, including the senior salary review body, would not cover nurses and teachers, since they will not have completed their three-year pay deal by next year. No recommendations have been made for the military.

The timing of the government's move last night, by the Treasury chief secretary, Liam Byrne, was clearly designed to pre-empt an expected pay and recruitment freeze likely to be proposed by Osborne today. Byrne justifies the freeze on the grounds of low inflation and the parlous state of public finances.

"If we want to halve the deficit over four years and protect frontline services, we have to make tough but realistic decisions on pay," Byrne said. "That means leadership from senior groups and realistic increases for other workforces."

Tory sources insisted their bold move on raising the pensionable age represented tough long-term action to tackle what Cameron described yesterday as "the clear and present danger" of the deficit.

The current women's pension age of 60 is already set to rise from next year by one year every two years to 2020.

The Turner review, overseen by the Blair government in 2004, had agreed that the pension age should not rise to 66 until 2026, but Turner is understood to support the 10-year acceleration to be proposed by Osborne, and is a leading candidate to re-examine the issue for the Tories if they win the election.

Osborne's announcement will be the first tangible sign of how he plans to cut the deficit faster than the government proposal to halve it by 2014. He knows he must announce unpalatable measures to give himself credibility with the markets, but believes the public is in the mood to accept the inevitability of spending constraint.

Osborne's strategy is also thought to include freezes in pay and recruitment in the public sector from next year.

Osborne will promise the increase in the pensionable age will not come until the second half of the next decade. In a bid to reassure the millions of pensioners and those close to retirement age, but not the 720,000 58-year-olds, Osborne will promise: "No one who is a pensioner today, or approaching retirement soon, will be affected".

Tory sources argue that average life expectancy has risen to 86, up from the 81 years projected at the time of the Turner commission in 2004. A record 11% of men over 65 are still in work.

Cameron, in a brief address to the conference yesterday, tried to steady his party for the unpalatable measures to be unveiled by Osborne, describing the debt and the deficit as "the biggest crisis facing our country".

Deploying wartime rhetoric, he said: "We will confront it. We know it is the first duty of a government to keep our country safe and strong – and that deficit is a clear and present danger to all of us."

This Tory conference week was not one for celebration, he said. "The problems are so severe, the crisis of our public services is so severe, that we need a positive and strong mandate for the changes we know our country needs."

Osborne will say he will not increase spending by £30bn, as proposed by Labour in the coming financial year, but will allow for some increase partly to take into account the impact of rising unemployment through next year.

The shadow chief secretary to the Treasury, Philip Hammond, insisted that if the Tories did not rein in the deficit, interest rates would rise, leading to higher unemployment.

Tory officials also had to defend themselves from Labour claims that their welfare-to-work package would require trying to save billions of pounds from the City to ensure that private sector companies were given the start-up finance they need.

Osborne yesterday strengthened the party's commitment to job creation by announcing he would abolish national insurance for two years for the first 10 workers hired by new firms. He said the measure would create 60,000 extra jobs and cost £250m a year. Employers currently pay 12.8% tax on salaries of staff.

The Liberal Democrat Treasury spokesman, Vince Cable, said: "The numbers Mr Osborne thinks this policy would help seem to have been plucked out of thin air. What is most worrying is that this tax break for new businesses would mean that they will be able to undercut existing small companies who are already struggling."

A Tory spokesman in effect acknowledged that the shadow chancellor had planned to propose a public sector pay and recruitment freeze today, saying the Treasury's move "comprehensively shows the Conservative party is setting the terms of the political debate on the economy".

He added: "It is surprising that the Labour chancellor chose to make this announcement – which affects hundreds of thousands of people in the middle of a Conservative party conference . People will question his motives."

There has been a broad tradition that parties do not make announcements during rival conferences.